Credit Contracts and Consumer Finance Amendment Bill
On 31 March 2025, the government introduced into Parliament a reform package making major changes to New Zealand’s financial services landscape. Included in the reform package is the Credit Contracts and Consumer Finance Amendment Bill which proposes to reform the regulation of credit markets to make them fairer, more efficient and transparent.
The overall intent of the Credit Contracts and Consumer Finance Act 2003 (CCCFA) is to protect consumers when borrowing money, or buying products or services on credit. The bill proposes significant changes to the CCCFA to modernise and improve the regulation of financial services, benefitting both consumers and lenders.
Key proposals and Implications
The bill proposes several key changes to the CCCFA. These aim to simplify and streamline compliance obligations for consumer credit providers (ie: businesses or individuals that offer credit, such as loans or credit cards) and, in some ways, reduce the risk of CCCFA breaches. We summarise the key changes.
FMA oversight
One of the most significant changes proposed is the shift in regulatory responsibility. The bill proposes to transfer the responsibility of enforcing the CCCFA from the Commerce Commission (CC) to the Financial Markets Authority (FMA).
The shift is intended to align consumer credit regulation with broader finance markets regulation under the Financial Markets Conduct Act 2013 (FMCA). This will result in the FMA becoming the sole conduct regulator for financial markets in New Zealand. By centralising regulatory oversight, the bill aims to create a more cohesive and efficient regulatory environment.
FMA licensing
The bill introduces a licensing regime for lenders, whereby lenders will need to be licensed under the FMA. This will replace the current certification system, where lenders must be certified by the CC (unless they are already exempt). For those already certified under the CC, there won’t be an immediate impact as they will be deemed to be licensed under the FMCA.
This change ensures that only qualified and responsible lenders operate in the market. The new licensing process will involve more stringent checks and ongoing compliance requirements that are intended to improve the overall quality and reliability of lenders.
Consequences of disclosure breaches
Another important aspect of the bill is the proposed amendment of disclosure requirements. The revision aims to avoid disproportionate consequences from minor or technical disclosure breaches.
The change will limit situations where a lender’s failure to make required initial or variation disclosures results in the debtor not being liable for the costs of borrowing. This change aims to balance the need for transparency with the practicalities of compliance, ensuring that consumers are adequately informed without imposing disproportionate burdens on lenders.
Other changes
The bill also includes some other changes for lenders that are intended to simplify and streamline the regulation of financial services. The key benefits include:
- Revoking the due diligence duty for directors and senior managers
- Repealing the annual reporting requirements, reducing ongoing compliance costs for lenders (ie: not required to prepare annual reports)
- Wider exemptions for loans to borrowers who are trustees (previously this exemption only applied to family trusts, but the bill extends this to any category of trust), and
- Lenders no longer being required to provide continuing disclosure if the borrower’s unpaid balance is available on the lender’s website, offering a more flexible approach to meeting disclosure requirements.
Next steps
It will be crucial for businesses to either engage, or keep up to date, with the consultation process for the reform package and to proactively adapt to the proposed changes.
Given the FMA’s additional role, lenders should evaluate their compliance practices to meet regulatory expectations under the licensing regime, and familiarise themselves with the additional obligations for licenced entities under the FMCA.
Being proactive and understanding how these changes will impact your business, especially lenders unfamiliar with FMCA licensing, will help ensure a smoother transition and improved compliance
once the changes are fully implemented.
Although the government has not indicated when this legislation will pass, it is expected before the end of the year. If you need assistance preparing your business for these proposed changes, please contact us. We are here to help.